Correlation Between Future Generation and National Storage
Can any of the company-specific risk be diversified away by investing in both Future Generation and National Storage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Future Generation and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Generation Global and National Storage REIT, you can compare the effects of market volatilities on Future Generation and National Storage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Future Generation with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Generation and National Storage.
Diversification Opportunities for Future Generation and National Storage
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Future and National is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Future Generation Global and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT and Future Generation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Future Generation Global are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage REIT has no effect on the direction of Future Generation i.e., Future Generation and National Storage go up and down completely randomly.
Pair Corralation between Future Generation and National Storage
Assuming the 90 days trading horizon Future Generation Global is expected to generate 0.66 times more return on investment than National Storage. However, Future Generation Global is 1.51 times less risky than National Storage. It trades about 0.2 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.02 per unit of risk. If you would invest 136.00 in Future Generation Global on September 4, 2024 and sell it today you would earn a total of 4.00 from holding Future Generation Global or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Future Generation Global vs. National Storage REIT
Performance |
| Timeline |
| Future Generation Global |
| National Storage REIT |
Future Generation and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Generation and National Storage
The main advantage of trading using opposite Future Generation and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Generation position performs unexpectedly, National Storage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in National Storage will offset losses from the drop in National Storage's long position.| Future Generation vs. National Storage REIT | Future Generation vs. MetalsGrove Mining | Future Generation vs. Perseus Mining | Future Generation vs. MotorCycle Holdings |
| National Storage vs. Scentre Group | National Storage vs. Vicinity Centres Re | National Storage vs. Charter Hall Retail | National Storage vs. Carindale Property Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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